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Thursday, 16 April 2015

Financial questions to ask BEFORE you get married

You don't have to be a regular reader of this blog to know that I'm interested in finance. Almost everything I write about is finance related and I am quite content sitting down and reading a finance book for hours on end.

I am also quite open about finance with those I talk to and am friends with. Whilst I don't disclose how much I earn or what I am worth to those who know me I will happily talk about money and finance with anyone who would like the discussion.

With that sort of background you would be forgiven for assuming that I had had every single discussion necessary about finance before entering married life. In fact I thought that is the one area that I had nailed down and that we didn't really need to talk about any more...but I was incredibly wrong!

There are a range of topics financial topics you need to talk about before committing to another person

I honestly thought I had covered all of the financial topics possible with my future wife. We knew how we were going to save for a house, how we were going to pay the bills, what we were going to do when kids came around...everything...or at least I thought so...

One of the things people highly recommend is doing a marriage course so my fiance and I went along to one of these courses which gave us a huge multi choice questionnaire which covered a heap of different topics. At least 30 of the questions covered finances and how much we had discussed them...and they covered incredibly important topics that we hadn't even touched.

Instead of just writing about my experience I thought I would make a list of topics that you should discuss with your significant other before you get married. This list isn't exhaustive and if there are other things that concern you then you should definitely talk about them!

Financial topics you should talk about before getting married

Broadly speaking the things you should talk about fall into a few broad categories

Life plans and preferred lifestyle and the income you will need to support these

Attitudes towards spending and saving

Debt, current and future and how this will be incurred

Savings, goals and how you will achieve these

The day to day organisation of your finances

1. Life plans, lifestyle and generating the income you need to support this

This is the first thing you should talk about and it is generally the topic that most people get right. You need to talk about what sort of life you want to lead. Will it be a relatively low cost one (which doesn't need a great deal of income) or will it involve expensive houses, cars and travel (which will require more income? Some questions you should discuss include:

Do you plan on having kids? If so when? How long will the mother be staying at home with the child?

What sort of education do you want for your child (if you want a private school education then you need to plan for this)

How often do you want to go away?

Where do you want to live? What sort of house do you want to live in?

What other 'big plans' do you want to have?

Are you happy to work a stable job your whole life or are you going to want to start a business which may be a bit more risky

As I mentioned above - generally people love life planning and will have talked through this kind of stuff to death. By the way - even if you think you know the answer it is always worth asking the questions above...you never know when an answer may surprise you.

2. Attitudes towards spending and saving

Understanding your partner's attitude towards spending and saving is incredibly important. Related to this is also your partner's attitude towards what is yours and what is theirs. There is no right and wrong when it comes to this discussion but again it is one that you need to have. Some topics may include:

If you had a spare $1,000 in the bank what would you do with it?

Do you save well? What % of your income do you try to save or do you just save what's left over?

How do you save?

Do you think you're an impulsive spender?

Would you rather spend money now or grow it and spend it later?

If you're the type of person who is a saver (like I am) please don't make the assumption that your partner is like you. It is really worth discussing your attitude towards money so that your partner understands where you are coming from and so that you understand their attitude towards spending and saving.

3. Debt - Current debt and future debt and how debt will be incurred

Debt is something that people rarely talk about. Current debt is seen as something to be hidden and future debt is often not what we think about. I confess that this is something that I completely neglected to chat about with my partner. Some questions you may want to ask include:

A discussion of the debts that you are each bringing into the relationship and your plan to pay it off

How do you spend on credit? What is your credit card balance and what is your attitude towards paying off the balance each month?

Will you both have credit cards when you join finances? Will there be a limit on how much you can spend on the credit card?

What sort of debt will you be comfortable with taking on to achieve your goals (e.g. buying a house etc.)

What is your attitude towards debt? Would you go into debt to fund a wedding?

Debt is such an important topic and we all tend to have strong views on it. The important thing is trying to understand the other person (not trying to say how you view it and what you would be willing to accept).

4. Savings, goals and how you will achieve these goals

This is related to topic 2 but it really comes down to what big goals that you have and that your partner may have that will require significant savings and effort. Questions may include:

Is there something big you are saving for?

If money wasn't an object what would you be doing?

What sort of retirement do you want and how much are you willing to give up today in order to reach that goal?

Working out that you and your partner have divergent goals after you're married is a recipe for disaster so chatting about these early is really important.

5. Day to day finances

How you organise your day to day finances is an incredibly important conversation. I confess this is another one I got wrong. I thought about it heaps and even wrote about it on this blog...but I never really had the discussion with my fiance. It's not that we disagreed...it's just that we hadn't had the conversation. Some questions you may want to ask include:

Do you want to have a joint account or separate accounts?

Who will be responsible for paying the bills?

Which account will our wages be paid into?

How will be decide what to spend joint savings on?

What will we be able to do without a discussion and what would we want a discussion about?

What do we think is fair (especially important if there is a large discrepancy in incomes)?

The practical stuff is often the stuff that gets ignored. Dating is not the same as combined finances and even though you may be doing a transitioned approach to combining finances there still will come a point where you need to have the discussion.

Are there any other questions you would ask your future partner? If you are married and the system works for you - what did you do? What did you wish you had done?

Thanks Jef. After doing that marriage course I realised that these aren't just "good to know" type questions. They are things you HAVE to chat about if you're going to live with someone.

The interesting thing is that sometimes you will assume an answer because it seems obvious but then your partner will have a completely different view that you never realised that they held. That's what happened to me anyway :P